The German Federal Constitutional Court in Karlsruhe dismissed a constitutional complaint by a Berlin property owner against the extension of the so-called rent brake regulations. The judges ruled that limiting rental rates does not violate the constitutional guarantee of property. This decision is crucial for millions of tenants across Germany, especially in conurbations struggling with a drastic housing shortage and sharp increases in market prices.
Court Dismisses Complaint
The judges in Karlsruhe ruled that the rent brake is fully compliant with the German constitution and does not violate property owners' rights.
Tenant Protection
The regulation aims to prevent exploitation in situations of housing shortage and stabilize rents in large conurbations.
Extension Until 2029
The court's decision confirms the legality of regulations that are to remain in force in Germany at least until the end of 2029.
The Federal Constitutional Court in Karlsruhe issued a landmark ruling on the rent brake (Mietpreisbremse). The judges rejected a constitutional complaint filed by a property owner from Berlin. The complainant argued that regulations introduced in 2015 and extended in 2020 violate her right to property. The court firmly dismissed these allegations, stating that the public interest in ensuring access to housing outweighs the pursuit of profit maximization. The rent brake mechanism was introduced in Germany in 2015 in response to the housing crisis. It allows state governments to designate areas where, for new contracts, the rent cannot exceed 110% of the local reference rent.The judges emphasized that the German Basic Law does not protect the right to the most profitable use of property. The regulation aims to prevent landlords from exploiting the housing shortage and to protect the social structure in cities. This ruling paves the way for continued application of the mechanism, which last summer was planned to be maintained until the end of 2029. However, experts note that while this tool protects current tenants' wallets, it does not solve the structural problem of the lack of new housing on the market. „Limiting the permissible rent at the start of a tenancy in areas with a tight housing market is proportionate and does not violate the guarantee of property.” — Federal Constitutional CourtCritics of the mechanism, in turn, highlight the risk of long-term inhibition of investment in construction. They point out that administrative regulations may discourage developers from creating new supply, which in the perspective of a decade could deepen housing shortages in metropolitan centers such as Munich or Berlin. However, the current ruling gives state governments (Länder) a strong legal mandate for market interventions.